Starboard Examines MedAssets, Trian Wants Seat at Pentair

Sept. 12, 2015 1:43 a.m. ET

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13Ds are filed with the Securities and Exchange Commission within 10 days of an entity’s attaining a greater than 5% position in any class of a company’s securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from Sept. 3 through Sept. 9, 2015. Source: InsiderScore.com

Activist Filings

On Sept. 7, Trian Fund Management entered into an agreement with Pentair that requires the industrial manufacturer to recommend that shareholders approve a plan to amend its articles of association.

The amendment that Trian is calling for would increase the size of the Pentair board by one seat, to a new total of 12 members. Assuming approval of the amendment at the company’s meeting of shareholders in 2016, Pentair would then appoint Edward Garden, Trian’s chief investment officer and founding partner, to the new seat. And until then, Garden would have the right to attend board meetings but participate only in a nonvoting capacity.

Original Filings

Discovery Equity Partners disclosed ownership of 1,908,145 shares (5.5%) of the online advertising-design and measurement platform, following the purchase of 719,690 shares in the period from Aug. 10 to Sept. 3 at prices ranging from $10.19 to $12.84 per share. Discovery said in its filing that it acquired the stake because it believes “the trading prices of the common stock do not adequately reflect the potential value of the company’s underlying business and assets.”

Increases in Holdings

B. Wayne Hughes increased his holdings in the single-family real estate investment trust to 19,905,561 shares (9.4%) after buying 12 million shares in the period from Aug. 20 through Sept. 4, at prices from $15.49 to $15.70 apiece. Hughes called the shares “an attractive investment.”

Gamco Investors
(ticker: GBL) boosted its ownership in the security monitoring and response company to 1,573,663 shares (12.2%) after it bought 156,098 from July 12 to Sept. 2 at $26.15 to $41.29 apiece. The firm sold 16,581 shares from July 10 to Aug. 12 at $26.21 to $41.50.

Gamco increased its holding in the manufacturer of engineered parts and products for aerospace, fluid handling, automated banking, and other sectors. It now owns 4,152,557 shares (7.2%) following its purchase of 62,508 from July 8 to Sept. 2 at prices ranging from $49.80 to $57.77 each. Gamco also sold 42,650 shares from July 13 to Sept. 1 at $50.28 to $57.63 per share.

Kopp Investment Advisors raised its ownership in the fiber-optics-focused semiconductor manufacturer to 3,204,723 shares (12.5%) after it bought 30,000 from July 10 to Aug. 28 at prices ranging from $5.80 to $7.07 each. Kopp also sold 4,500 shares on July 7 at $5.95 each.

Decreases in Holdings

Radiant CEO and Chairman Bohn Crain lowered his holdings in the logistics and transportation company to 9,945,152 (20.4%) by selling 935,333 shares on July 21 at $6.345 apiece as part of a secondary offering.

Separately reported, Stephen M. Cohen cut his ownership to 2,170,667 shares (4.5%) following the sale of 199,333 at $6.345 apiece on July 21 in a secondary offering.

Key Numbers: 32%: the company’s Ebitda margin, versus 39.6% for peer Premier 69.8%: percentage of votes against the company’s “Say-on-Pay” compensation plan $37 to $46: the price Starboard believes the company’s stock price could be by the end of 2016 if it pursued Starboard’s plan of action

Behind the Scenes: The company’s group purchasing business is very profitable, and the revenue cycle management business has enormous growth potential. But excess costs from the lack of integration of nine businesses acquired over the past 10 years shields the value of these acquired businesses. Starboard is advocating that MedAssets divest or fully integrate and improve the nine businesses. It would also like to see the company cut corporate overhead, capex, and development costs, and get its Ebitda margin closer to that of its peers. The company’s founder recently retired and was replaced with a CEO who has a great track record, but more changes may be needed. A board with fresh blood would be integral in a strategic review process, and Starboard has extensive experience in assisting in these types of changes at a board level. Starboard will probably end up with some board representation, as shareholders have recently indicated that they are unhappy with current management.

—Kenneth Squire

The 13D Activist Fund, a mutual fund run by an affiliate of the author and not connected to Barron’s, has a long position in MedAssets in the securities mentioned here. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.

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